Agency M&A deals in U.S. and Canada inched higher in 2019, led once again by private equity/hybrid buyers
CHICAGO, IL / ACCESSWIRE / February 4, 2020 / Mergers and acquisitions of insurance agents and brokers broke records in 2019, according to OPTIS Partners' annual report. The OPTIS database logged a record 649 deals in the United States and Canada in 2019, including 320 transactions in the second half of the year and 149 transactions during the fourth quarter.
In 2019, previously the most active year, there were 643 M&A deals.
"Agency valuations continue to climb based in part on the continued expansion of interest from the PE/hybrid group," said Timothy J. Cunningham, managing director of OPTIS, an investment banking and financial consulting firm specializing in the insurance industry. "There's nothing on the horizon to indicate any change should be expected in the current state of agency M&A."
The report covers firms selling primarily property-and-casualty insurance and related MGA's and TPA's, both P&C and employee benefits, and employee benefits agencies.
Private equity/hybrid buyers accounted for 448 transactions, representing 69% of the total, compared with 434 transactions also 68 % in 2019.
The number of unique buyers has dropped from 153 in 2016 to 131 in 2019 while the number of PE/hybrid buyers has increased from 27 to 35 during the same period. At the same time, the top 10 buyers in 2019 accounted for 58% of transactions, a slight decrease from 61% in 2019.
The top five buyers were Acrisure (98 acquisitions), Hub International (51), AssuredPartners (44), Broadstreet Partners (34) and Gallagher (33). All were in the PE/hybrid category except publicly owned Gallagher.
Privately owned firms completed 118 transactions in 2019, up from 114 acquisitions in 2019.
P&C Agencies Were Top Sellers
By seller type, property-and-casualty-focused agencies dominated the list. They accounted for 329 of the 2019 transactions, 51 % of the total. Employee benefits brokers accounted for 162 transactions, 25% of the total.
"Despite the slight reduction in the number of deals completed during the latter half of 2019, we believe the environment remains very strong for agencies looking to sell," said Daniel P. Menzer, partner.
"With the multiples being offered, few sellers should have any difficulty achieving the financial returns they are looking for. And with such a variety of buyers in the marketplace, sellers need to fully explore their options in order to find the right partner with a culture and business model that will best fit their people, clients, and organizational structure."
The OPTIS database tracks a consistent pool of the most active acquirers and other announced transactions, and is, therefore, a reasonably accurate indication of deal activity in the sector. The actual number of agency acquisitions was far greater than the number reported, as many buyers and sellers do not report transactions, and some acquirers do not report small transactions.
The full report, 2019 Agent & Broker Mergers & Acquisition Update, can be read online at http://optisins.com/wp/2020/01/december-2019-ma-report.
OPTIS Partners was ranked in the top five most active agent-broker M&A advisory firms for 2014-2019 by S&P Global Market Intelligence.
Focused exclusively on the insurance-distribution marketplace, Chicago-based OPTIS Partners (www.optisins.com) offers merger & acquisition representation for buyers and sellers, including due-diligence reviews. It provides appraisals of fair market value; financial performance review, including trend analysis and internal controls; and ownership transition and perpetuation planning.
Contact:
Tim Cunningham, OPTIS Partners, [email protected], 312-235-0081
Dan Menzer, OPTIS Partners, [email protected], 630-520-0490
Henry Stimpson, Stimpson Communications, 508-647-0705 [email protected]
SOURCE: OPTIS Partners